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Comment by mikeash | Hacker News Reader

I would argue that credit bureaus leaking all your information to criminals and then charging you money to protect you from those criminals is also criminal fraud writ large.

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That doesn't seem relevant to the question of whether credit scores are statistically useful.

We've established that sufficiently advanced fraud can overcome the ability of organizations to vet the info that’s given to them. If the credit bureaus are actually organizations dedicated to fraud, then the fact that many other organization fall for it doesn’t tell us too much about their accuracy.

If Osama bin Laden's ghost appears to you and says "There will not be a terrorist attack in New York tomorrow.", and then there is, and this repeats a few times, the fact that his statement is, facially, a lie, and the fact that he can't even exist doesn't matter. You have an input that correlates with a certain output. The intent of the person who provided you the input, or even how nonsensical you think the input is, doesn't change its statistical usefulness.

So how did all these sophisticated financial organizations get taken by subprime mortgage bundles in 2008?

They didn't. Pension plans and individual investors are not sophisticated financial organizations. They rely on those that are to do their job in a non-fraudulent manner. They didn't.

Bear Stearns? Lehman Brothers? AIG? The hundreds of banks that went under?

Committed or were complicit in the fraud and got in too deep to recover from the inevitable crash. This has all been widely and loudly reported on for a decade. There's a reason people are pissed that the executives who ran these institutions into the ground and fucked up the economy were barely prosecuted.

So in addition to the info being valid or the organization evaluating it being too stupid to evaluate it correctly, we also have the possibility that these organizations are involved or complicit in the fraud.

Why am I supposed to take it as a given that if these organizations use the info it must be useful, then?

If it's not, they're wasting money for no reason, and someone will come along and do the same thing without giving the credit bureaus any money. They're not actually legally obliged to use credit bureau data. They could just throw money at people in the street and hope they get confused and throw back more.

I'm sorry, but is the reason that Equifax isn't in the same class as these guys because Equifax was totally upstanding, never cut corners or fudged numbers and were absolutely upfront when this security breach happened? Because if that's so then I'm curious about the breach they detected three month prior that they tried to cover up.

Equifax is just as shady as those lenders - more so IMO because they have absolutely no obligation or business relationship directly with the individual's whose private data they compromised.

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